The Future Of Business Finance: 2024 Trends To Watch
As the financial landscape undergoes rapid transformations, staying informed about the latest trends is crucial for businesses owners. Successfully managing business finance is typically one of the main goals for SMEs in the new year.
From new budgeting approaches to the integration of cutting-edge technologies, this article delves into some of the key factors that will shape the financial terrain in the next 12 months.
Let’s explore the business finance trends anticipated to shape the year 2024.
1. Staying Resilient In An Inflationary Environment
In the coming year, there is a consensus that inflation will persist for an extended period, primarily stemming from external pricing. This implies that companies will have to reconsider and adapt their business models in response to external factors influencing their pricing.
It is expected that bank rates will not stabilise or decrease until the latter part of 2024. Therefore, SMEs and business owners should be prepared for slight to moderate rate increases until then.
Different measures to control inflation will add financial pressure on the average consumer, causing a decline in customers’ discretionary spending on everyday items.
Despite economic challenges, the Australian small business community has stayed resilient, innovative, and diverse. Much like their consistent approach in recent years, small business owners will view 2024 as an opportunity rather than a challenge.
According to Dynamic Business’ insights, data indicates that business growth through customer retention is 70% more cost-effective than pursuing growth through acquisition. Retention also plays a pivotal role in driving acquisition because satisfied customers not only reward businesses with their loyalty but also advocate for them among friends, family, and colleagues.
2. Business Analytics
Finance departments are under increasing pressure to provide stakeholders with more frequent and detailed reports. In an environment where public opinions, market trends, and operational dynamics can swiftly change, having timely insights is invaluable.
The availability of real-time data analytics is crucial for maintaining competitiveness and relevance in today’s dynamic business climate. SMEs could use business analytics to optimise inventory levels, refine marketing campaigns, or identify potential business opportunities.
According to AvidXChange 2024 Trends Survey, 66% of finance leaders stated that their teams currently have access to real-time data analytics for supporting business finance analysis. While 20% have plans to implement real-time analytics in 2024.
Data analytics is primarily utilised for informed decision-making, with finance teams focusing on analysing invoice data (75%), measuring invoice and payment workflows (67%), and tracking purchasing payments (60%).
3. The Proliferation Of Generative AI And Automation
This might be the year when AI becomes a transformative force across various sectors and companies. The increased deployment of AI is expected to automate tasks such as fraud detection, tax compliance checks, drafting financial reports, refining marketing materials, and more.
It’s likely that business finance professionals will need to undergo upskilling to keep up to date with these changes. To enhance expertise in these areas, an investment in training and development may be required for staff members.
The increasing popularity of cloud-based financial management systems is anticipated, facilitating collaboration among teams and providing real-time data access. Small business owners could benefit from looking into incorporating automation for a streamlined workflow with better efficiency.
Given the reduced face-to-face contact with remote and hybrid workforces, it is crucial to employ tech tools to help track employee spending. This is essential to prevent unauthorised spending and ensure compliance with company policies.
4. Cybersecurity And Risk Management
The online environment nowadays is filled with cybersecurity risks, especially for business finance management systems that are potential targets for hackers. Organisations and businesses might need to prioritise cybersecurity and risk management to address these challenges.
Businesses should invest in robust cybersecurity measures and develop comprehensive incident response plans to mitigate the risks of severe financial losses, regulatory fines, and reputational damage resulting from data breaches.
Advanced risk management techniques should be implemented to protect financial assets, ensure business continuity and uphold the trust of stakeholders.
5. Regulatory Compliance And Reporting
Financial regulations are in a constant state of change, and maintaining compliance remains a primary concern for businesses. In 2024, there will be ongoing alterations to regulatory compliance and reporting requirements, posing fresh challenges for business finance management.
Organisations will be required to allocate resources to invest in technologies and processes dedicated to guarantee adherence to the latest regulations.
The use of automation and data analytics will play a pivotal role in streamlining the compliance process, ultimately diminishing the risk of penalties and legal complications.
6. Inclusive Budgeting And Forecasting
Budgeting and forecasting stand as crucial elements in business finance management. In 2024, there will be an increasing emphasis on inclusive budgeting. This approach incorporates input from various departments and stakeholders, fostering a more accurate and collaborative budgeting process.
Inclusive budgeting ensures alignment between financial plans and company goals, resulting in a more agile and responsive financial management strategy. Additionally, it cultivates a sense of ownership and accountability among employees throughout the organisation.
7. Real-Time Payments
There is a high anticipation for digital payments to enhance relationships between businesses with vendors. This could involve an increased emphasis on real-time payments, revolutionising the financial industry and challenging traditional banking models by facilitating immediate transaction processing and settlement.
Moreover, forward-thinking banks may venture into innovative services built upon instant payment systems. This could include account-to-account payments, real-time bill payments, and request-to-pay functionality. Such services can offer companies more streamlined and convenient methods for managing their business finance.
8. Blockchain And Crypto
In 2024, there will be an increase in cryptocurrency regulation, but crypto is likely to stay on the periphery of mainstream investing until regulatory measures are viewed as effective and firmly established.
Simultaneously, the advantages of blockchain technology in terms of security, transparency, and record-keeping will become more prominent.
This technology will see increased utilisation in areas such as contract management, supply chain financing, and fraud prevention software applications. For instance, envision the implementation of a “smart contract” that automatically enforces agreements.
Conclusion
The financial landscape is undergoing major changes, with pivotal trends anticipated in the year 2024. It’s crucial for companies and organisations to keep up with new trends to succeed in this constantly evolving environment.
Business owners should stay informed to stay ahead, and position their businesses for success in the dynamic world of finance.
